The DCIT, Circle-1, Ahmedabad V. Arfin India Ltd., Ahmedabad

ITA 1024/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5728 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 08-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Keywords: Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1024/AHD/2007 A. Y.: 2003-04 THE D. C. I. T., CIRCLE-1, 3 RD FLOOR, JITENDRA CHAMVERS, R. B. I. LANE, ASHRAM ROAD, AHMEDABAD VS ARFIN INDIA LTD., H-10. MADHUPURA MARKET, SHAHIBAUG, AHMEDABAD PA NO. AAECA 1211 A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. M. MAHESH, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, AHMEDABAD DATED 11-12-2006 FOR ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUND: 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTI NG THE AO TO TREAT THE SPECULATION LOSS OF RS.32,85,198/- AS NORMAL BUSINESS LOSS. 2. WE HAVE HEARD LEARNED DR AND PERUSED THE FINDIN GS OF THE AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE A SSESSEE DESPITE SERVICE OF NOTICE. THE ASSESSEE IS, THEREFORE, PROC EEDED EX-PARTE. 3. THE AO HAS STATED THAT IN THE IMMEDIATELY PRECED ING ASSESSMENT YEAR 2002-03 IN SIMILAR CIRCUMSTANCES THE LOSS WAS TAKEN TO BE SPECULATIVE LOSS AND RELYING UPON THE SAME REASONS HE HAS STATED THE LOSS OF RS.32,85,198/- AS SPECULATIVE AND MADE THE ADDITION. THE AO FURTHER NOTED THAT THE ASSESSEE IS A NON BANKING FI NANCE COMPANY AND IS MAINLY ENGAGED IN GRANTING LOANS AND ADVANCES. THE ASSESSEE HAS SHOWN OPENING STOCK OF RS.45,72,469/- AND CLOSING STOCK O F RS.6,58,376/- AND NO PURCHASE WAS MADE DURING THE YEAR. SALES HAVE BE EN MADE AT ITA NO.1024/AHD/2007 DCIT VS ARFIN INDIA LTD., AHMEDABAD 2 RS.6,28,885/- ON THE SALE OF SHARES OF RS.39,14,09 3/- RESULTING IN GROSS LOSS OF RS.32,85,198/-. THE AO FOLLOWING THE FINDIN G FOR ASSESSMENT YEAR 2002-03 AGAIN TREATED THE LOSS AS SPECULATIVE LOSS. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE IS A NO N BANKING FINANCE COMPANY AND ITS PRINCIPLE BUSINESS IS GRANTING OF L OANS AND ADVANCES AND AS SUCH EXPLANATION TO SECTION 73 WAS NOT ATTRA CTED TO THE CASE OF THE ASSESSEE. IT WAS SUBMITTED THAT THE AO MADE THE ADDITION RELYING UPON THE FINDINGS FOR ASSESSMENT YEAR 2002-03, HOWE VER, THE LEARNED CIT(A) HAS NOT APPRECIATED THE ACTION OF THE AO AND ADDITION HAS BEEN DELETED. THE LEARNED CIT(A) FOUND THE CONTENTION OF THE ASSESSEE TO BE CORRECT BECAUSE IN ASSESSMENT YEAR 2002-03, THE LEA RNED CIT(A) VIDE ORDER DATED 28-03-2006 DELETED THE ADDITION BECAUSE IT WAS FOUND THAT LOSS WAS NORMAL BUSINESS LOSS. 4. THE LEARNED DR WAS DIRECTED TO ASCERTAIN WHETHER THE DEPARTMENT HAS PREFERRED ANY APPEAL BEFORE THE TRIBUNAL FOR AS SESSMENT YEAR 2002- 03. THE LEARNED DR FILED COPY OF THE ORDER OF THE L EARNED CIT(A) 28-03- 2006 FOR ASSESSMENT YEAR 2002-03 AND SUBMITTED THAT THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL BEFORE THE TRIBUNAL AG AINST THIS ORDER. THE LEARNED DR HOWEVER, RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT EXPLANATION TO SECTION 73 OF THE IT ACT WOULD APPLY IN THE CASE OF THE ASSESSEE. THEREFORE, LOSS WAS RIGHTLY TREATED AS SP ECULATIVE LOSS BY THE AO. 5. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE LEARNED DR, WE ARE OF THE VIEW T HAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE AO HAS NOTED IN THE A SSESSMENT ORDER THAT THE ASSESSEE IS A NON BANKING FINANCE COMPANY AND I S MAINLY ENGAGED IN GRANTING LOANS AND ADVANCES. THE AO HOWEVER, DID NO T CONSIDER EXPLANATION OF THE ASSESSEE AND BY FOLLOWING HIS FI NDINGS FOR ASSESSMENT YEAR 2002-03 TREATED THE LOSS TO BE SPECULATIVE LOS S. HOWEVER, THE ITA NO.1024/AHD/2007 DCIT VS ARFIN INDIA LTD., AHMEDABAD 3 LEARNED CIT(A) CONSIDERING THE FACTS OF THE CASE IN ASSESSMENT YEAR 2002- 03, DELETED THE ENTIRE ADDITION VIDE ORDER DATED 28 -03-2006 AND THE FINDING OF FAT RECORDED BY LEARNED CIT(A) HAVE BECO ME FINAL BECAUSE NO APPEAL IS PREFERRED BEFORE THE TRIBUNAL. THE FINDIN GS OF THE LEARNED CIT(A) IN ASSESSMENT YEAR 2002-03 IN PARA 4 AND 5 ARE REPR ODUCED AS UNDER: 4. I HAVE PERUSED THE CONTENTIONS AND FACTS SUBMITTED BY THE APPELLANT AND THE SAME HAVE BEEN CONSIDERED. THE APPELLANT COMPANY IS A REGISTERED NBFC WITH RBI. IT IS ALSO FOUND THAT GRANTING LOANS AND ADVANCES IS AN ACTIVITY AND ITS PRINCIPAL BUSINESS. THE MEMORANDUM OF APPELLANT COMPANY SHOWS THAT ONE OF THE PRINCIPAL BUSINESS OF THE COMPANY IS GRANTING L OANS AND ADVANCES. THE ASSESSEES CONTENTION IS FOUND CORRECT FROM THE FACTS AND DETAILS PRODUCED. THE JUDGMENT IN THE CASE OF DCIT VS VENKATSHWAR INVESTMENT & FINANCE (P) LTD. (2004) 92 TTJ 1129 (I TAT- CAL) (SB), A. Y. 1997-98, QUOTED BY THE APPELLANT I S JUSTIFIED. THEREFORE, ADDITION MADE BY THE ASSESSIN G OFFICER IS DIRECTED TO BE DELETED. 5. IN THE RESULT APPEAL IS ALLOWED. SINCE THE FINDING OF FACT HAS BECOME FINAL AND THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD AGAINST THE ASSESSEE, THEREF ORE, DEPARTMENTAL APPEAL WOULD NOT HAVE ANY MERIT. THE AO HAS MERELY RELIED UPON THE FINDINGS GIVEN IN PRECEDING ASSESSMENT YEAR 2002-03 WHICH HAVE BEEN SET ASIDE BY THE LEARNED CIT(A). THEREFORE, NOTHING IS LEFT TO SUPPORT THE FINDING OF THE AO IN THE ASSESSMENT YEARS UNDER APP EAL. SINCE IT IS ADMITTED FACT THAT THE ASSESSEE IS NON BANKING FINA NCE COMPANY AND MAINLY ENGAGED IN GRANTING LOANS AND ADVANCES, THER EFORE, EXPLANATION TO SECTION 73 IS NO APPLICABLE TO THE COMPANIES WH OSE PRINCIPAL BUSINESS IS BANKING OR GRANTING LOANS OR ADVANCES. THE ABOVE CONDITION IS FOUND TO BE SATISFIED IN THE CASE OF THE ASSESSEE IN ASSESSM ENT YEAR 2002-03 BY THE LEARNED CIT(A) WHICH IS ACCEPTED BY THE REVENUE DEPARTMENT. THEREFORE, THERE IS NO ILLEGALITY OR PERVERSITY IN THE APPROACH OF THE LEARNED CIT(A) IN RELYING UPON THE ORDER OF THE LEA RNED CIT(A) FOR THE ITA NO.1024/AHD/2007 DCIT VS ARFIN INDIA LTD., AHMEDABAD 4 PRECEDING ASSESSMENT YEAR 2002-03. THE LEARNED DR F ILED WRITTEN SUBMISSION AND TRIED TO DISTINGUISH THE CASE BY REL YING UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF C IT VS PARK VIEW PROPERTIES PVT. LTD. 261 ITR 473. HOWEVER, THE SAME WOULD NOT ADVANCE THE CONTENTION OF THE LEARNED DR PARTICULARLY WHEN THE REVENUE HAS ACCEPTED THE ORDER OF THE LEARNED CIT(A) IN PRECEDI NG ASSESSMENT YEAR 2002-03 AS NOTED ABOVE AND THE FINDING OF FACT HAS BECOME FINAL IN THE CASE OF THE SAME ASSESSEE. THE AO HAS NOT GIVEN ANY OTHER FINDING AGAINST THE ASSESSEE BECAUSE HE HAS MERELY FOLLOWED HIS ORDER FOR PRECEDING ASSESSMENT YEAR AND AS SUCH WE DO NOT FIN D IF THERE IS ANY DISTINGUISHABLE FACT AVAILABLE ON RECORD AS IS SUBM ITTED BY THE LEARNED DR. 6. CONSIDERING THE ABOVE DISCUSSIONS, WE DO NOT FIN D ANY MERIT IN THE DEPARTMENTAL APPEAL. THE SAME IS ACCORDINGLY DISMIS SED. 7. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 16-07-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 16-07-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD